Five Questions for Financial Advisors

By | 2018-08-13T02:41:11+00:00 May 15th, 2018|

Thinking about hiring a financial advisor? Here are five questions to ask potential advisors to help you determine the best fit.

1. What services do you provide?

Not all advisors are the same. Some are investment-focused and others are focused on helping you through financial planning. Others sell various types of life insurance.

Do you want help planning towards non-investment financial goals? Most advisors say they will help with financial planning, but most brokers or insurance advisors don’t offer this as a core service. On the other hand, some financial planners do a great job providing advice and written financial plans but don’t provide investment management.

2. Can you explain your investment philosophy?

The goal with this question is to twofold. First, does your advisor have a process for investing your money? How does he select mutual funds? What does he do when the market goes down?

Second, can he explain this in a way that makes sense to you? Advisors have a bad habit of using jargon when talking with non-finance people. Having an understanding of how your money is invested will help you stay committed to building your wealth, even in uncertain times.

3. Who is your typical client?

Does the advisor specialize in working with particular professions or investors in certain life stages? Do you need a minimum amount of investable assets? Or, does their investment philosophy cater to a client with a specific tolerance for risk? Even if the advisor is “all things to all people,” chances are they enjoy working with clients that fit a certain profile. If you find yourself outside that profile you may not be a good long-term fit.

4. How do your fees work? Or, how do you get paid?

Fees should be communicated clearly. Transparency is important when your money is being handled by someone else.

Advisors can be paid in the following ways:

  1. Through commissions by investing your money in investment products like mutual funds and annuities.
  2. Through an annual fee based on how much money he is managing for you.
  3. Through a fee for creating and helping you implement a financial plan.

Be wary of anyone who says their investments don’t charge you a fee (i.e. fixed annuities). Even if you don’t see a charge, fees are built into the product’s potential return, and you may be locked into an investment long-term. For more on this, take a look at this post.

5. Why should I work with you?

Advisors have heard these questions before. Now, give the potential advisor an opportunity to sell herself. What, in her mind, does she do really well?

If you’re reading this, chances are you’re exploring the idea of how a financial advisor can help you reach your goals. The advisors at Stewardship would love to chat with you and see if we may be a good fit to partner with you.

As a Registered Investment Advisor, we can partner in two ways. First, we can help you invest your money. Second, we can help you through financial planning—making smarter decisions with your money. We are committed to helping you build wealth and are transparent with how we get paid. Clients who enjoy working with us tend to be in the stage of life where they are saving, building wealth, and taking care of their families.

Does this sound like you? We make it easy to schedule a meeting, phone call, or video chat.


About the Author:

Jake is a co-founder and Director of Investing at Stewardship Financial. In his role he gets to help people make smarter decisions on how to invest in the capital markets.